Foreigners were net buyers of R688.204 million of South African bonds including repo transactions on Wednesday after net purchases of R3.487 billion of local bonds on Tuesday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R76.438 billion on Wednesday from R187.038 billion on Tuesday.
Foreigners were net buyers of R686.683 million of South African bonds excluding repo transactions on Wednesday after net purchases of R3.429 billion of local bonds on Tuesday.
For the year to date, foreigners have been net buyers of R17.610 billion worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064 billion worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R10.317 billion of local bonds. In 2010 they bought net R44.541 billion worth of bonds.
SA has exported 37,598 tons of white maize in the week ended May 6, marking the beginning of the new season, the South African Grain Information Service's weekly report showed this week. Total white maize thus stands at 37,598 tons.
The bulk of the shipment - 22,342 tons - went to Mexico. The balance went to Botswana, Lesotho, Mozambique, Namibia, Swaziland, Zimbabwe, Senegal and Somalia. Yellow maize exports in the week under review stand at 42,819 tons, with the total for the new season remaining the same.
White maize for the 2010-11 season totalled 1.050 million tons.
By Artwell Dlamini
The JSE regained its composure and was stronger at noon on Wednesday, tracking European stocks, which were generally firmer after the release of German inflation data. The local bourse was tentatively weaker in the morning session.
By 12.00pm local time, the JSE all-share index had risen 0.65%, with gold miners firming 1.86%, resources rising 0.95% and platinum stocks gaining 0.34%. Financials were firmer at 0.20% and industrials picked up 0.54%. Banks, however, were flat (-0.09%).
The rand was bid at R6.74/$ from R6.76/$ at the JSE's close on Tuesday. Gold was quoted at $1,523.52 a troy ounce from $1,516.71/oz at the JSE's previous close, while platinum was at $1,799/oz, from $1,795.50/oz previously.
"The German inflation numbers are positive for the market as they suggest that the European Central Bank (ECB) has the case to keep interest rates low," an equity dealer said, of the inflation data that came in line with expectations.
High interest rates in Europe meant that the struggling euro-zone countries would struggle further, while the rates slowed down growth in Germany, the region's economic powerhouse, the equity dealer said. There are concerns over Greece's debt.
Dow Jones Newswires reported that European stock markets were little changed in choppy trade on Wednesday, supported by positive sessions in the US and Asia, but unable to make significant headway amid lingering worries about sovereign debt.
Uncertainty over Greece's debt situation remained a concern, traders said, especially with anti-austerity strikes planned across the country on Wednesday. "The debate around the additional aid required to set Greece on a sustainable footing looks set to rumble on at least until the conclusion of the May 16 Ecofin get-together," said Lloyds Bank Corporate Markets.
In London, the FTSE 100 was last 0.18% higher.
Asian shares mostly advanced on Wednesday, as rising metals prices lifted the shares of the region's miners and a weaker yen boosted Japanese exporters.
The gains, however, were capped as a batch of Chinese economic data suggested that elevated inflation might lead Beijing to implement further tightening measures even as industrial production slows down.
Japan's Nikkei Stock Average rose 0.5%. The Australian S&P/ASX 200 index closed up 1.2% at 4,780.20. The Shanghai Composite ended 0.3% lower at 2,883.4, while Hong Kong's Hang Seng Index retreated 0.2% to 23,291.8.
On the JSE, Anglo American rose R1.51 to R341.50, Sasol jumped R5.96 or 1.66% to R365.96 and BHP Billiton was up R2.43 to R273.15.
Among gold counters, Anglogold Ashanti advanced R8.50 or 2.73% to R319.50 after announcing on Wednesday that its adjusted headline earnings tripled in the first three months of the year to $0.53 a share from $0.17 a share for the corresponding three months of last year.
Adjusted headline earnings totalled $203 million in the March quarter. In the March quarter of 2010, the company reported adjusted headline earnings of $61 million.
Production was, however, almost 4% lower at 1.039 million ounces (Moz) compared with 1.079Moz in the same quarter last year. Total cash costs of producing gold were up 14% to $706/oz from $619/oz last year. This is slightly above the company's first-quarter guidance of 1.04Moz at $675/oz to $700/oz.
Also in the gold sector, Harmony rose R1.08 or 1.16% to R94.50 and DRD Gold climbed 11 cents or 2.99% to R3.79.
Platinum miner Eastern Platinum rallied 25 cents or 3.25% to R7.95 and Aquarius added 49 cents or 1.27% to R38.99.
Steel producer ArcelorMittal lost R1.36 or 1.66% to R80.74 after reported headline earnings per share of 49 cents for the quarter ending in March, down from the 186 cents per share reported in the corresponding quarter of 2010, but a marked turnaround from the loss of 123 cents reported in the quarter ended December 2010.
In a significant turnaround from the R496 million loss reported for the fourth quarter of 2010, attributable earnings of R184 million were achieved for the first quarter of 2011.
Diversified miner African Rainbow collected R4.46 or 2.22% to R205.56 and Exxaro firmed R2.50 or 1.47% to R172.50.
In the industrial sector, SABMiller inched up R3.50 or 1.41% to R252.00, and Richemont found R1.04 or 2.46% to R43.40.
Information and communications technology group Datatec surged R1.76 or 4.92% to R37.56. The company on Wednesday reported a 25% rise in underlying earnings per share to $0.37,9 for the year ending in February from $0.30,3 cents a year ago.
The group declared a capital distribution per share of $0.13 - up 8% from 2010's $0.12. Revenue was 15% higher at $4.3 billion, with 35% of revenue generated from North America (2010: 38%), 36% from Europe (2010: 39%), 11% from Asia Pacific (2010: 9%), 11% from Latin America (2010: 8%) and 7% from AIME (2010: 6%). Earnings before interest, tax, depreciation and amortisation were up 31% to $142.2 million.
Operating profit increased by 38% to $105.0 million and profit before tax increased 45% to $78.2 million, after fair value movements on put option liabilities.
Financial services group Santam shed R2.22 or 1.71% to R127.78.
Retailer Spar slipped R3.07 or 3.20% to R92.93. The group on Wednesday reported diluted headline earnings per share of 262.1 cents for the six months ending in March, compared with 264.6 cents a year ago. Headline earnings per share were up 0.6% to 279.8 cents.
An interim dividend of 142 cents per share was declared, from 140 cents a year ago. The group's turnover grew 9.1% to R19.1 billion, while operating profit increased by 4.1% to R706.6 million. Revenue was at R19.2 billion from R17.7 billion previously.
Trading for the period under review was challenging, Spar said, with consumer spending still under pressure, continued low food inflation below 2% and a very competitive retail environment.
By Zeenat Moorad
Bonds were weaker in midday trade on Wednesday, on the back of the softer local currency and some selling of shorter-dated bonds.
The main focus this week is the all-important SA Reserve Bank (SARB) Monetary Policy Committee (MPC) meeting, which got underway yesterday, with the decision on interest rates due on Thursday afternoon.
By 11.45am, the benchmark R157 bond was trading at 7.580% and offered at 7.575% from 7.550% at the previous close. The R207 was bid at 8.360% and offered at 8.330% from 8.310%. The R186 was trading at 8.510% and offered at 8.525% from its previous close of 8.510%.
The rand was bid at R6.7677/$ from its previous close of R6.7171/$.
"We're weaker on the rand and we saw some local hedge funds selling R157s this morning," said a Cape Town-based trader.
She added that traders across the board believed that rates would be kept on hold at the MPC meeting.
"It's the statement and whether it's hawkish or dovish that we'll look out for," she added.
Earlier, Standard Bank analysts said that foreign portfolio buying of South African debt had remained strong in the past few days, with the very long-end outperforming the belly of the curve.
"Trade is likely to quiet down before tomorrow afternoon's MPC decision and statement, hence the current strong momentum in yields is expected to stall over the next two sessions," they said.
The repo rate is expected to remain unchanged when the MPC announces its rates decision on Thursday afternoon, according to a survey of nine leading economists by I-Net Bridge.
The rate was cut by 50 basis points to 5.5% in November 2010. This was the lowest reading in almost 30 years and resulted in a real interest rate of about 1%.
Foreigners were net buyers of R3.487 billion of bonds including repo transactions on Tuesday after net purchases of R217.529 million of local bonds on Monday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R187.038 billion on Tuesday from R72.023 billion on Monday.
Foreigners were net buyers of R3.429 billion of bonds excluding repo transactions on Tuesday after net purchases of R214.576 million of local bonds on Monday.
For the year to date, foreigners have been net buyers of R16.923 billion worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064 billion worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R9.629 billion of local bonds. In 2010 they bought net R44.541 billion worth of bonds.
By Gareth Vorster
The rand lost further ground against the dollar in midday trade on Wednesday amid uncertainty and volatility in the market due to continued concerns over Greece, which pushed the euro weaker.
At 11.44am local time, the rand was bid at R6.7661/$ from its previous close of R6.7171/$. It was bid at R9.7317/€ from R9.6948/€ before and at R11.1341/£ from R11.0065/£ at its previous close.
The euro was bid at $1.4398 from $1.4406 before.
A local dealer said: "We have seen quite a lot of volatility with much uncertainty in the market over the past few days." He noted that the dollar/euro had swung one way and then the other, saying that the uncertainty was still caused by concerns over Greece's sovereign debt issue.
RMB's currency strategists, John Cairns and Nema Ramkhelawan, said in a morning note that Greece's credit rating was the big news.
"Following acknowledgements last week that another bailout will be needed, Standard & Poor's cut the country's rating into junk territory yesterday, at B, one notch above Pakistan, saying that the face value of debt may have to be reduced by as much as 70%!"
They added that it wouldn't be surprising if Moody's and Fitch followed with multiple notch downgrades.
This was affecting the rand via both risk aversion - emerging market equities and currencies have been sold off - and via the euro/dollar, which dipped all the way to under 1.4300 yesterday.
"This has jerked the dollar/rand around sharply, from a 6.66 low to 6.76. Fortunes are now tied to the euro/dollar, which is showing no obvious direction but a lot of scope for volatility. Sentiment will drive moves today in the absence of any major data."
RMB said that yesterday's reserve figures, meanwhile, were "quite interesting", suggesting as they did that the authorities did little to combat rand strength in April.
"Is this only an anomaly or have the authorities backed off, perhaps because a stronger rand would help combat some inflationary pressure?" RMB asked.
Meanwhile, Dow Jones Newswires reported that in European foreign exchange, the euro was weaker against the dollar amid ongoing worries about how Greek debt could be restructured and the dangers of a default.
Tokyo traders said that the euro may face steeper declines later in the day as China's inflation data would likely weigh on global share prices.
China's consumer price index rose 5.3% from a year ago in April, faster than the 5.2% gain expected by economists and premier Wen Jiabao's 4% target for each month this year. In March, the index climbed by 5.4%.
"Chinese CPI data were totally unkind to stock investors, and it's possible we will see the markets plunging very soon, say, in today's European market at the earliest," said Hideki Amikura, a senior dealer at Nomura Trust and Banking.
Amikura said the euro would likely fall below the $1.40 mark in the coming days, adding that speeches by European Central Bank officials as well as developments over debt-burdened Greece were on his must-watch list.
By Zeenat Moorad
Bonds were mostly untraded in early trade on Wednesday, with little in the way of news to move the market. A local trader said the benchmark R157 was slightly weaker in line with the rand.
The main focus this week is the all-important SA Reserve Bank (SARB) Monetary Policy Committee (MPC) meeting, which got underway yesterday, with the decision on interest rates due on Thursday afternoon.
By 8.45am, the benchmark R157 bond was trading at 7.550% and offered at 7.540% from 7.550% at the previous close. The R207 was bid at 8.325% and offered at 8.295% from 8.310%. The R186 was bid at 8.515% and offered at 8.485% from its previous close of 8.510%.
The rand was bid at R6.7416/$ from its previous close of R6.7171/$.
Standard Bank analysts said in a morning report that foreign portfolio buying of SA debt had remained strong in the last few days, with the very long-end outperforming the belly of the curve.
"Trade is likely to quiet down before tomorrow afternoon's MPC decision and statement, hence the current strong momentum in yields is expected to stall over the next two sessions," they said.
The repo rate is expected to remain unchanged when the MPC announces its rates decision on Thursday afternoon, according to a survey of nine leading economists by I-Net Bridge.
The rate was cut by 50 basis points to 5.5% in November 2010. This was the lowest reading in almost 30 years and resulted in a real interest rate of about 1%.
Foreigners were net buyers of R3.487 billion of bonds including repo transactions on Tuesday after net purchases of R217.529 million of local bonds on Monday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R187.038 billion on Tuesday from R72.023 billion on Monday.
Foreigners were net buyers of R3.429 billion of bonds excluding repo transactions on Tuesday after net purchases of R214.576 million of local bonds on Monday.
For the year to date, foreigners have been net buyers of R16.923 billion worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064 billion worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R9.629 billion of local bonds. In 2010 they bought net R44.541 billion worth of bonds.
By Janice Roberts
The rand was softer against the dollar in early morning trade on Wednesday as it tracked a vulnerable euro.
"There's not much going on but if the euro strengthens the rand should follow. Otherwise we're looking at a rand dollar range of 6.73 to 6.78," a local trader said.
At 8.43am local time, the rand was bid at R6.7245/$ from its previous close of R6.7171/$. It was bid at R9.7131/€ from R9.6948/€ before and at R11.0180/£ from R11.0065/£ at its previous close.
The euro was bid at $1.4400 from $1.4406 before.
RMB's currency strategists, John Cairns and Nema Ramkhelawan, said in a morning note that with euro/dollar striding towards 1.50 last week, it seemed as though the market had slipped into denial about the severity of the sovereign debt crisis.
"Lofty interest rate expectations largely underpinned the move but the unit appeared overstretched. The stark realisation that Greece stands little chance of issuing long term debt from the first quarter of 2012, led to a sharp correction in euro/dollar last Friday - an action, or rather reaction, which is perhaps long overdue."
They added that almost a year after the EU and IMF had extended their hands in support to Greece, European authorities were still contemplating the provision of additional funds to keep the sinking peripheral economy afloat.
"While extending the maturity of Greece's existing bailout package would defer the restructuring of Greek debt, it is unlikely to quash rumours about the country's possible withdrawal from the Eurozone. "
The mere mention of Greece being exiled from the euro area had prompted a sharp bout of risk aversion last week, leaving markets in complete disarray.
"While dollar/rand has stabilised around 6.75, the unit (akin to most EM currencies) could face massive upside risk should political backbiting among Greek cabinet members delay the EU's decision to provide further loans."
There was considerable debate as to whether policymakers in core economies would oblige so soon after the conditions of Portugal's package were finalised.
"Two bailouts in quick succession could reignite fears of moral hazard across the periphery, though failure to do so would be far more detrimental to the region as a whole."
RMB said that rand/dollar volatility should subside as commodities prices even out but would remain vulnerable to developments in the Eurozone.
Meanwhile, Dow Jones Newswires reported that the euro edged down against the dollar Wednesday in Asia, and Tokyo traders said it may face steeper declines later in the day as China's inflation data would likely weigh on global share prices.
China's consumer price index rose 5.3% from a year ago in April, faster than the 5.2% gain expected by economists and than Premier Wen Jiabao's 4% target for each month this year. In March, the index climbed by 5.4%.
The inflation trend, along with a ballooning trade surplus, was strong evidence the pace of economic growth was still too rapid. Traders said speculation would increase that the government would soon take steps to put the brakes on.
Such steps might include additional monetary policy tightening and a stronger yuan, both negative to share prices and therefore to the euro, which had a correlation to equities.
"Chinese CPI data were totally unkind to stock investors, and it's possible we will see the markets plunging very soon, say, in today's European market at the earliest," said Hideki Amikura, a senior dealer at Nomura Trust and Banking.
Amikura said the euro would likely fall below the $1.40 mark in the coming days, adding that speeches by European Central Bank officials as well as developments over debt-burdened Greece were on his must-watch list.
By Andries Mahlangu
Maize futures rallied on Tuesday, supported by the US corn market amid the broad recovery of commodities following last week's sell-off.
Fears of tighter wheat supplies in wheat producing countries also led the upside.
The May white maize contract jumped R52 to R1,655 per ton, the July 2011 contract rallied R53.80 to R1,672.80 and the September 2011 white maize contract lifted R56 to R1,707, according to preliminary I-Net Bridge data.
The May yellow maize contract added R53 to R1,684 per ton and July yellow maize gained R50 to R1,709 per ton. The September yellow maize contract pocketed R51 to R1,744.
The May wheat contract was up R69 to R3,209 per ton, July wheat leapt R81 to R3,192, and the September wheat contract lifted R75 to R3,185.
Andrew Fletcher, a trader at Unigrain, said: "We saw some strong buying come through, as the US corn market bounced off their lows, seen last week. There are also reports of dry weather conditions in some wheat producing countries, which could potentially affect the supplies."
At 12.00pm, when the local grains market closed, the rand was trading at R6.71/$, from R6.65/$ in the previous session.
Dow Jones Newswires reported that US grain futures surged on Monday as commodities recovered from heavy selling last week and poor weather threatened global output.
Soft red winter wheat shot up 31 cents, or 4.1%, to $7.90 1/2 a bushel, while corn climbed 21 1/4 cents, or 3.1%, to $7.07 1/2 a bushel. July is the most-actively traded contract in each market.
Surging prices for crude oil and precious metals and weakness in the US dollar rekindled buying interest in the grains amid ideas that last week's declines were overdone. Wheat lost 5% last week and corn sank 9% as broad selling engulfed commodity markets.
"I'd say it marks the end of the correction in commodities in general," Bill Gentry, analyst for Risk Management Commodities, said about the rally.
Wheat futures led the recovery as concerns increased about dry weather hurting output in the southern US Plains and Europe.
In Kansas, the top US producer of bread wheat, temperatures topped 100 degrees during the weekend, adding stress to crops after months of drought.
France and Germany also missed out on rains.
Forecaster WeatherEdge Ltd warned each country may have lost 15% to 20% of their wheat crops due to weeks of persistent dryness.
For more information on final grain prices, logon to http://www.jse.co.za/DownloadFiles.aspx?RequestedNode=/DownloadableDocuments/Safex/amdmtm at 18:00pm.
By Andries Mahlangu
After a tentative start, the JSE gained some ground in midday trade on Tuesday, mainly supported by mining stocks.
By 12.00pm local time, the JSE all-share index had added 0.80%, with gold miners rising 0.97% and resources finding 1.47%. Platinum stocks, however, were flat (0.03%). Banks edged up 0.24% and financials were firmer at 0.34%, industrials rose 0.48%.
The rand was bid at R6.71/$, from R6.75/$ at the JSE's close on Monday. Gold was quoted at $1,516.56 a troy ounce from $1,508/oz at the JSE's previous close, while platinum was at $1,798.50/oz, from $1,791.50/oz previously.
"The market is relatively muted today, although we are firmer on the back of the diversified mining stocks. It could still be some bargain hunting following the selloff we witnessed last week," said Ian Cruickshanks, head of treasury strategic research at Nedbank Capital.
Dow Jones Newswires reported that European stock markets advanced on Tuesday, led by resource shares following strong Chinese trade data and easing European debt worries after Greece's successful Treasury bills auction. London's FTSE 100 index added 1.3% to 6,022.72.
Most Asian markets ended higher on Tuesday, with Chinese shares climbing amid hopes upcoming data might show a moderation in monthly inflation, but Japanese stocks' gains on upbeat earnings were capped by a stronger yen.
Most markets gained on the back of Monday's advance on Wall Street, although European sovereign debt worries kept investors in a cautious frame of mind.
China's Shanghai Composite Index rose 0.6% to 2,890.63, Japan's Nikkei Stock Average gained 0.3% to 9,818.76 and Australia's S&P/ASX 200 fell 0.7% to 4725.80. South Korean and Hong Kong markets were shut for public holidays.
Dow Jones Industrial Average futures were up 43 points in screen trade.
On the JSE, Anglo American rose R4.60 or 1.38% to R336.80, BHP Billiton firmed R5.07 or 1.92% to R269.58 and Sasol gained R6.22 or 1.77% to R357.22.
Among gold counters, Harmony picked up 61 cents to R93.61. Anglo Gold Ashanti found R2.69 to R310.69. Gold Fields added R1.41 or 1.31% to R109.26.
Among platinum stocks, Impala Platinum lost 20 cents to R185.40, Northam Platinum fell 50 cents or 1.13% to R43.90 and Angloplat was down R4.99 to R624.99. Assore gained 93 cents to R206.03.
Exxaro rallied R4.15 or 2.50% to R170.40. Africa Rainbow Minerals gained R1.61 to R199.59.
British American Tobacco was up R3.09 or 1.05% to R296.60 and SABMiller was R2.23 stronger at R245.50.
Among banks, Standard Bank was up 36 cents to R99.51, but Nedbank lost 30 cents to R140.95 while Absa added R1.17 to R134.65.
Among companies in focus, Massmart was up 45 cents to R140.25. The retailer said on Tuesday that, for the 44 weeks to May 1, its total sales increased to R44.9 billion - a growth of 12.7% over the prior period.
Comparable store sales grew 6.2%, while deflation for the period was estimated at 1.8%.
In line with past practice, during the week of July 4 Massmart will release a sales update for the financial year to June 2011, it said.
Nampak was up 16 cents to R22.17. The packaging company advised on Tuesday that it expected headline earnings per share and earnings per share from continuing operations to be between 20% and 40% higher for the six months ending in March, from 72.8 cents and 75.9 cents per share previously.
The group said that the increased earnings were due mainly to improved results from flexibles, diversified canning and African operations, the turnaround or sale of non-performing operations and a reduction in finance charges due to lower gearing.
By Sherilee L Lakmidas
Bonds were up to 4.5 basis points firmer in midday trade on Tuesday, after a strong bond auction and foreign buying boosted investor interest.
By 11.45am, the benchmark R157 bond was trading at 7.510% from 7.555% at the previous close. The R207 was bid at 8.305% and offered at 8.275% from 8.350%. The R186 was trading at 8.520% and offered at 8.475% from its previous close of 8.545%.
The rand was bid at R6.7183/$ from its previous close of R6.6986/$.
"Today's auction was very strong, particularly the R208 which cleared higher than where the market was," a local bond trader said.
The South African Treasury on Tuesday allotted R1.5 billion worth of R208 bonds at a clearing yield of 8.350% and R600 million worth of R214 bonds at a clearing yield of 8.810%.
Like Monday, the market was also firmer on the back of foreign buying.
"We are looking for bonds to continue benefiting from the trend in foreign buying. When the market ticks up you tend to see foreigners come in to the market," he added.
The main focus this week is, however, the SA Reserve Bank's (SARB's) Monetary Policy Committee (MPC) meeting.
The MPC gets underway on Tuesday with the decision on interest rates due on Thursday afternoon.
The repo rate is expected to remain unchanged when the MPC announces its rates decision on May 12, according to a survey of nine leading economists by I-Net Bridge.
The rate was cut by 50 basis points to 5.5% in November 2010. This was the lowest reading in almost 30 years and resulted in a real interest rate of about 1%.
Foreigners were net buyers of R217.529 million of bonds including repo transactions on Monday after net purchases of R1.647 billion of local bonds on Friday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R72.023 billion on Monday from R60.115 billion on Friday.
Foreigners were net buyers of R214.576 million of bonds excluding repo transactions on Monday after net purchases of R1.954 billion of local bonds on Friday.
For the year to date, foreigners have been net buyers of R13.494 billion worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064 billion worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R6.142 billion of local bonds. In 2010 they bought net R44.541 billion worth of bonds.
By Gareth Vorster
The rand remained on the back foot against the buck in midday trade on Tuesday amid market volatility and uncertainty created by sovereign debt concerns within the euro zone.
At 11.42am local time, the rand was bid at R6.7344/$ from its previous close of R6.6986/$. It was bid at R9.6602/€ from R9.6545/€ before and at R11.0160/£ from R11.0057/£ at its previous close.
The euro was bid at $1.4359 from $1.4374 before.
"We are in an immense state of uncertainty at the moment, particularly in the euro zone where you have problems in Greece, Italy and a number of other countries. The rand has shown a bit of vulnerability this morning amid some covering by nervous investors. I think that if we see some stability within the euro, we could see the rand firm up a bit." He pointed to a range of 6.70-6.78 against the greenback.
RMB's currency strategists, John Cairns and Nema Ramkhelawan, said in a morning note that Greece's credit rating was the big news.
"Following acknowledgements last week that another bailout will be needed, Standard & Poor's cut the country's rating into junk territory yesterday, at B, one notch above Pakistan, saying that the face value of debt may have to be reduced by as much as 70%!"
They added that it wouldn't be surprising if Moody's and Fitch followed with multiple notch downgrades.
This was affecting the rand via both risk aversion - emerging market equities and currencies have been sold off - and via the euro/US dollar, which dipped all the way to under 1.4300 yesterday.
"This has jerked the dollar/rand around sharply, from a 6.66 low to 6.76. Fortunes are now tied to the euro/dollar, which is showing no obvious direction but a lot of scope for volatility. Sentiment will drive moves today in the absence of any major data."
RMB said that yesterday's reserve figures, meanwhile, were "quite interesting", suggesting as they did that the authorities did little to combat rand strength in April.
"Is this only an anomaly or have the authorities backed off, perhaps because a stronger rand would help combat some inflationary pressure?" RMB asked.
Meanwhile, Dow Jones Newswires reported that uncertainty over the European Union's (EU's) ability to manage Greece's debt problems, along with a slide in oil prices that tempered euro-zone interest rate hike speculation, sent the common currency to a six-week low against the yen in Asia on Tuesday.
Dealers said the euro could continue to fall in coming sessions, as Standard & Poor's cut Monday to Greece's credit rating highlighted continued concerns over a revival of the sovereign debt problems that plagued the euro a year ago.
Comments from a governing council member of the European Central Bank, Ewald Nowotny, intensified the euro-selling against other currencies in afternoon trade Tuesday. Nowotny said that the international community had underestimated Greece's problems.
By Jacqueline Mackenzie
Bonds were quiet in early trade on Tuesday, but were bid slightly weaker on the softer rand and ahead of the weekly government bond auction later this morning.
By 8.55am, the benchmark R157 bond was bid at 7.570% and offered at 7.550% from 7.555% at the previous close. The R207 was bid at 8.370% and offered at 8.340% from 8.350%. The R186 was bid at 8.555% and offered at 8.535% from its previous close of 8.545%.
The rand was bid at R6.7484/$ from its previous close of R6.6986/$.
The main focus this week will be the all-important SA Reserve Bank (SARB) Monetary Policy Committee (MPC) meeting, which gets underway today, with the decision on interest rates due on Thursday afternoon.
The repo rate is expected to remain unchanged when the MPC announces its rates decision on Thursday afternoon, according to a survey of nine leading economists by I-Net Bridge.
The rate was cut by 50 basis points to 5.5% in November 2010. This was the lowest reading in almost 30 years and resulted in a real interest rate of about 1%.
A local trader said bonds were slightly softer on the weaker rand and ahead of the bond auction and the MPC rates decision.
"You are not going to see any big positions taken ahead of these events," he said.
The National Treasury will auction R1.5 billion worth of R208 bonds and R600 million worth of R214 bonds at its regular weekly bond auction this morning.
The SARB's MPC committee convenes today for the start of its three-day discussion on interest rates.
"While the risks to the inflation outlook have certainly increased to the upside, macroeconomic conditions seem similarly placed at the time of the last MPC meeting. The oil price has retreated somewhat and the rand is only fractionally stronger.
"Manufacturing production, however, has improved, but on the flipside, labour market woes will continue to concern policymakers. We therefore believe that the SARB may keep rates on hold until further evidence of an increase in economic activity," said Standard Bank analysts in a morning note.
Absa Capital added that a further event of note today is the release of Stats SA's manufacturing capacity utilisation figures for the first quarter of the year.
"We think capacity utilisation rose further in the quarter, given the strong growth momentum in manufacturing production and healthy vehicle exports and PMI prints. Critically, we will be looking to see whether this series can break-above its long-term average of 84%, from the fourth quarter of 2010's 81.6% reading. The last time capacity utilisation was above its long-term average was in the third quarter of 2008," they wrote.
Foreigners were net buyers of R217.529 million of bonds including repo transactions on Monday after net purchases of R1.647 billion of local bonds on Friday, Bond Exchange of South Africa statistics show.
Nominal cumulative volume was R72.023 billion on Monday from R60.115 billion on Friday.
Foreigners were net buyers of R214.576 million of bonds excluding repo transactions on Monday after net purchases of R1.954 billion of local bonds on Friday.
For the year to date, foreigners have been net buyers of R13.494 billion worth of local bonds, excluding repo transactions. In 2010 foreigners bought net R57.064 billion worth of local bonds, excluding repo transactions.
For the year to date for total transactions, including repo transactions, foreigners have been net buyers of R6.142 billion of local bonds. In 2010 they bought net R44.541 billion worth of bonds.
By Janice Roberts
The rand was softer against the dollar in early morning trade on Tuesday as a result of increased risk aversion.
"It's all tied to the euro, which is looking quite soft and is promoting risk aversion," a local rand trader said.
He put the dollar/rand in a range of 6.72 to 6.77 "to start off with, but let's see what the euro does".
He added that if the euro consolidated, then the rand would stay in ranges.
"If there's pressure on the euro, then we're looking at 6.79 to the dollar."
At 8.41am local time, the rand was bid at R6.7438/$ from its previous close of R6.6986/$. It was bid at R9.6428/€ from R9.6545/€ before and at R11.0202/£ from R11.0057/£ at its previous close.
The euro was bid at $1.4296 from $1.4374 before.
RMB's currency strategists, John Cairns and Nema Ramkhelawan, said in a morning note that Greece's credit rating was the big news.
"Following acknowledgements last week that another bailout will be needed, Standard & Poor's cut the country's rating into junk territory yesterday, at B, one notch above Pakistan, saying that the face value of debt may have to be reduced by as much as 70%!"
They added that it wouldn't be surprising if Moody's and Fitch followed with multiple notch downgrades.
This was affecting the rand via both risk aversion - emerging market equities and currencies have been sold off - and via the euro/US dollar, which dipped all the way to under 1.4300 yesterday.
"This has jerked the dollar/rand around sharply, from a 6.66 low to 6.76. Fortunes are now tied to the euro/dollar, which is showing no obvious direction but a lot of scope for volatility. Sentiment will drive moves today in the absence of any major data."
RMB said that yesterday's reserve figures, meanwhile, were "quite interesting", suggesting as they did that the authorities did little to combat rand strength in April.
"Is this only an anomaly or have the authorities backed off, perhaps because a stronger rand would help combat some inflationary pressure?" RMB asked.
Meanwhile, Dow Jones Newswires reported that uncertainty over the European Union's (EU's) ability to manage Greece's debt problems, along with a slide in oil prices that tempered euro-zone interest rate hike speculation, sent the common currency to a six-week low against the yen in Asia on Tuesday.
Dealers said the euro could continue to fall in coming sessions, as Standard & Poor's cut Monday to Greece's credit rating highlighted continued concerns over a revival of the sovereign debt problems that plagued the euro a year ago.
Comments from a governing council member of the European Central Bank, Ewald Nowotny, intensified the euro-selling against other currencies in afternoon trade Tuesday. Nowotny said that the international community had underestimated Greece's problems.
The euro dropped to Y114.77 against the yen, its lowest since March 28, and $1.4272 against the dollar, near the three-week low of $1.4254 it hit Monday.
"There continues to be growing concern among investors about how the EU will manage the Greek government's unsustainable debt dynamics," said Barclays Capital foreign exchange analysts David Forrester and Yuki Sakasai in a research note.
S&P's move on Monday to Greece's credit rating underscored such concerns, analysts said.
"Uncertainty is the key factor here in our opinion," Forrester and Sakasai said.
"While there was a top-level meeting of officials over the weekend on this issue, no official information on the outcome of this meeting has been released to the public."
